Blasé Capital BROTHER & NEPHEWS

For years, it was alleged that Vinod Adani, the brother of Gautam Adani, patriarch of Adani Group, was one of the masterminds behind the ownerships of several entities in tax havens like Mauritius. These seemingly-shadowy firms traded in the shares of group entities, which violated Indian laws. These related to non-disclosures as related-party deals, promoters’ holdings going up beyond the requisite limits in listed firms, and manipulation of stock prices. The charges culminated in a detailed investigation by an American short-seller, which decimated the share prices of most Adani-owned firms. For years, the group maintained that the brothers had an estranged relationship, and Vinod Adani was not a part of the promoter-family. After the short-seller report, when the Supreme Court asked the stock market regulator, SEBI, to conduct a thorough investigation, Gautam accepted Vinod as his brother, and part of the family, and agreed to include the brotherly deals as part of the related-party transactions in the various balance sheets. It marked the end of the rivalry, and controversy with a reconciliation.

Last year, the US market regulator, SEC, alleged that Gautam Adani, his nephew, Sagar, and a few executives paid bribes of more than $250 million to Indian policy-makers and officials to secure solar energy contracts. Paid between 2020 and 2024, with the largest portion to those in Andhra Pradesh, the bribes could generate profits of $2 billion to the group in the future. The US-based Azure, which is linked to the Adani Group, was involved in the payments. The SEC got in touch with the Indian ministry of law and justice to serve notices to the accused-defendants. The summons was delivered through the diplomatic channels, and the Indian Government acknowledged the receipt, as per a SEC status report in April 2025. In a two-page letter to a court in New York, which was the fifth status report in eight months, the SEC claimed that the Indian ministry had not served the notices to Gautam Adani, and Sagar. The regulator would continue its efforts to “serve” the defendants. In effect, the SEC hinted that India seemed uninterested.

Yet another nephew of Gautam Adani, Pranav, and the latter’s two brothers-in-law, were allegedly involved in two cases of insider trading in India. SEBI maintained that Pranav shared price-sensitive information with Nrupal Shah, and Kunal Shah about Adani Green’s acquisition of Soft Bank-backed SB Energy Holdings before the deal was announced. In May 2021, Adani Green announced its acquisition plan, and its share price rose by Rs 50, or almost four per cent on a single day, May 19, 2021. The brothers-in-law purchased more than 1,00,000 shares in Adani Green at INR 1,100, or at a lower price than the closing one on May 18, and sold them at a higher price to earn profits of more than INR 90,00,000. Later the charges were dropped, and SEBI clarified that the phone call made by Pranav to one of his brothers-in-law did not communicate insider information. Instead, Kunal Shah and Nrupal Shah’s deals were “genuine and not influenced by any UPSI (unpublished price sensitive information) about the company or its securities.” Thus, the allegations could not be confirmed.

Now, another set of insider trading charges have surfaced against Pranav Adani. In a recent notice, SEBI charged that during the takeover of NDTV in August 2022 phone calls were exchanged between Pranav and the two brothers-in-law, as well as the father-in-law, Dhanpal Shah, to share details. According to SEBI, Kunal Shah purchased NDTV shares prior to the announcement. On August 8, 2022, his purchases accounted for nine per cent of the day’s traded volumes. His net position at one point was 78,000 shares, which were squared off after the announcement at higher prices. Together, the three Shahs earned combined profits of nearly INR 1.4 crore through the insider trading activities. The day after the public announcement of the takeover, NDTV jumped by nearly five per cent in a single trading session. Since the Shahs were “connected persons” as defined by SEBI rules and laws, they were deemed to be insiders. Media reports indicate that the regulator had initiated proceedings against Gautam Adani’s nephew, and the latter’s in-laws.

Over the past three decades, ever since SEBI came into existence, leading business families were charged with the violations of insider trading laws. Most of them either came to a compromise with the regulator, without accepting or denying the charges, and paid the requisite fines. In other cases, the courts found them not-guilty. Only in rare cases were the big fish indicted. In most insider trading cases, it is the small fish who find themselves under the scanner. A recent study concludes that the “insider trading laws, through precedents set by SEBI orders, and other judgments, is evolving in a haphazard manner, sometimes due to new situations and cases, but often due to contrary positions taken by SEBI, as well as the appellate tribunal. Consequently, insider trading verdicts, except in standard and brazen violations, remain a matter of chance.” In similar cases, SEBI’s members draw out different distinctions, which burdens the appellate tribunal with deciding which one is justified. By then, another regulator’s member may have taken another novel approach.